The average target price of BDL.NS is 1592 and suggests 13% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 2250.0. This translates into 23% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 870.0. This is equivalent to 52% downside potential in the worst case. 

Bharat Dynamics Limited engages in the manufacture and sale of guided missiles and allied defense products in India. It provides surface to air missiles, anti-tank guided missiles, underwater weapons, launchers, counter measures dispensing systems, test equipment, torpedoes, and mechanized infantry weapons, as well as anti-submarine warfare suite. The company offers its products to Indian Armed forces and government of India. It also exports its products. Bharat Dynamics Limited was incorporated in 1970 and is headquartered in Hyderabad, India.

India

Bharat Dynamics Limited

Industrials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends twice a year. 

BDL.NS reported revenue of INR 33 029mn in the last 12 months, up 39% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS grew 30% from FY24 to INR 14.99. Market expects EPS to reach INR 21.54 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 22ppts over past six months and grown 7ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is positive. Usually, this means that a fairly valued or slightly undervalued stock has become more 'expensive', indicating that the market, in general, may have gained short-term confidence in the stock.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 24.9% in the last 12 months, a decline from 31.1% in FY24. 

Historically, BDL.NS has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 16.6%, down from 23.8% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to 7.4%, below the peers. The consensus estimate for FY25 for RoCE is 10.1%, again behind the peers. 

Bharat Dynamics Limited reported a return on equity (RoE) of 13.7% in the last 12 months, down from 14.8% in FY24. The market consensus projects an RoE of 18.0% in FY25, this time above its peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.7% in the last 12 months, a decrease from 5.1% in FY24. The market analysts predict that RoA will be 5.6% in FY25, more robust than its peers in this period. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.6 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

BDL.NS has above average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually stable and is unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, BDL.NS is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, BDL.NS is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITD. 

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Bharat Dynamics Limited

₹ 1829.2

4

Bharat Dynamics Limited

₹ 1829.2

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 1829.2

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